Planning Finances as a PA with PA the FI Way

Are ya'll enjoying our recent focus on finances? Do you know what "financial independence" is? Kat from @pathefiway is on The Pre-PA Club podcast today to tell us about her journey to establishing a financial education and helping other PAs meet their financial goals through her podcast - PA the FI Way. It was a really fun conversation, and I'm actually on her podcast as well talking about my student loans and creative outlet through The PA Platform.

Kat: So my name is Katarina, but I often go by Kat. I am a PA that lives in the upper Midwest. And I went to a PA school at Des Moines University. 

Savanna: Awesome and you're practicing now? 

Kat: Correct! Yep, I started in family medicine for about six and a half years. And I recently switched over to outpatient psychiatry back in January. I still do have a casual position with my previous employer as a walk-in/Urgent Care PA role too, so I like to keep that generalized medicine still going on too.

Savanna: Nice! Are you doing in-person psychiatry or mainly telemedicine? 

Kat: When I first started, because of the COVID pandemic, it was mainly telemedicine, but just recently we switched back over to seeing people in person again too. 

Savanna: Okay, interesting. Yeah, that's what a lot of my PA friends who work in Psych have been doing - a lot of telemedicine. It's a specialty that definitely translates well to that. I'm in dermatology, and it's a little hard to see things over Zoom, when trying to look at skin lesions. We've made it work, but it was a little difficult. So, let's take it back a little bit and what made you interested in becoming a PA?

Kat: So back when I was in high school, I felt as though I needed to figure out what to do with my life, as I'm sure many people felt the need to do back then. And I really enjoyed science, and I hadn't really thought about different types of careers in medicine. So back then in high school, a lot of people only think of doctors or nurses, although there are so many other types of careers out there in medicine as well. I highly encourage anybody interested in medicine to research about and consider other careers as well. But when I was in eighth grade, I tore my ACL my first and last time skiing, because I was not a good skier haha. And in the ER, the provider who saw me was a PA, and I didn't necessarily register it at the time as a teenager. But a few years later when I was thinking about what to do for school, my mom reminded me that that provider was a PA, and so we researched the profession together. I just really liked the fact that you get to have less student loan debt, and a little bit less time in school as well. I also really enjoyed the lateral mobility of the profession, obviously as I've utilized, so those were the factors that prompted me to pursue the PA profession.

Savanna: Nice! Yeah I feel like everyone comes to it in a different way but those personal medical experiences tend to be a common theme where you figure out, oh there are people who can take care of me who aren't necessarily doctors, which is nice and a good path to take. So I've actually never had a PA who works in psychiatry on the podcast surprisingly because I feel like there aren't that many of y'all. There's definitely a need and I know in the area I'm in in Georgia, we definitely need more psychiatry providers. What does a typical day at your job look like? What is your schedule like in that specialty?

 Kat: Definitely, you're correct that there are definitely few PAs in psychiatry. When I was looking into switching into a specialty, the research I found at the time was that probably less than 1% of PAs work in psychiatry, so I thought that was very interesting. During a typical day right now, I will see either intake patients, or follow up patients. Intakes are new visits, and they are either self-referred, like some people just want to see a psychiatry provider for some reason, or family medicine may refer them, or a lot of times, they are follow-up from a recent inpatient hospitalization for psychiatric purposes, and we are seeing them once they've been stabilized in the hospital. As I mentioned too, it’s both currently a little bit of Telehealth visits, a little bit of in-person visits, so it's a little bit of both going on. We also manage their mental health medications, and we have to monitor labs with that. It's very weird, I'm sure you can relate as a derm PA, but it's very weird not to use the stethoscope anymore day-to-day. But that was something to get used to, but I still feel as though I'm helping people, and it's definitely a very interesting specialty for sure. You see a lot of different things, lots of different mental health illnesses, but it's very rewarding to try to help others feel better and try to help stabilize their mental health symptoms, so that they can improve. 

Savanna: So are there any limitations in your specialty? Because I don't know about where you're at, but as far as with medications you're able to prescribe, just being in a specialty where you may be prescribing drugs that are on different schedules? 

Kat: Sure, so that's a great question! At my company, they are very much trained on the job. So, the medical director is the supervising physician that we work with. In my state, we don't technically need the true supervising physician role anymore because of legislation changes. But every company keeps that role differently, right? So he's a psychiatrist, and he works with the PAs and is very hands on. So we have a weekly meeting with him where we ask all of our questions; we can send him messages all the time; we can go down the hall if he's in clinic. He oversees the PAs at other clinics as well which is really cool. So he's very hands on. We prescribe and manage all mental health meds. There's even one of the big gun antipsychotics called Clozaril (clozapine), you have to take some online training and then we manage that and prescribe that as well. A lot of injectable medications and controlled substances too, but I do appreciate that our company has a pretty strict controlled substance agreement policy. So we don't mix any controlled substances. Or if patients are using drugs like medical marijuana, depending on the situation, we often don't use controlled substances as well. So I do appreciate that support too. 

Savanna: That's awesome. That sounds like a really great work environment and set up, which should be a goal for anyone who wants to be a PA. I want to pivot a little bit. So the reason we connected was through Instagram, and I started seeing your posts pop up on your account PA the FI Way, which we'll explain a little bit about. but so can you just explain what got you interested in financial topics and what inspired you to kind of create your account and podcast?

Kat: Yeah that's a great question. So, I guess for financial topics… I really wasn't that into finances. My husband used to manage all the bills, so I just thought that he manages the bills and I didn’t really have to learn much about finances. As a PA, I was just learning so much that I didn’t necessarily mind. I was definitely trying to pay off my student loans, but now aggressively. Unfortunately, I started off working with a financial advisor, who was not the best fit, because some things that he suggested aren't necessarily sound wisdom, so we got burned a little bit right out of PA school. How I got into the topic of financial independence was through travel rewards or travel hacking. We were on our way to a friend’s wedding, and one of my friend’s husbands asked, “hey do you like traveling? have you heard of travel hacking?” And he introduced me to the Choose FI Podcast. That is the podcast I started listening to, and that's how I got hooked on financial independence. I became kind of frustrated with our training - about how much we get into debt. We do earn a fair income out of PA school, but how do you balance that? So, it made me want to try to educate other current and future PAs out there about the concept of financial independence. 

Savanna: I'd say in the last couple of years, that is something I learned about because they don't really teach us in school about debt or loans or investing or any of that. So it's a lot of self learning. But this concept of financial independence was new to me. Can you explain what that means on kind of a basic level for somebody who's never heard of it?

Kat: Sure, so financial independence is a very broad topic, but I will definitely do my best to try to explain it simply to those who are just kind of getting started. So financial independence, the abbreviation is FI (that's where PA the FI Way came from). And that's the first part of the acronym FIRE, or Financial Independence, Retire Early. Retire Early is actually optional, so once someone reaches the point of financial independence, they don't have to retire early. They certainly can continue working as a PA for many, many years to come if they would like to, but reaching that point provides many doors throughout your life, like you could consider cutting back on work or things like that. So, FI is the point at which a person (or a couple) reaches where they have invested savings equal to 25 times their expected annual expenses. So a lot of financial calculators look at your current income, but it's not really what you make that matters for retirement, it's what you expect to spend in retirement. For example, if a couple expects to spend $80,000 per year once they stop working, then they will need to have invested $2 million, or investments plus savings money. Otherwise, if they are able to live very frugally on only $40,000 a year, they would only need $1 million. Some people are really frugal and live on less than that as well. So financial independence is based on something called the Trinity Study, and what that study shows is that if you reach financial independence, you have a very high probability that you'll be able to last for 30 years with your finances. So if you are thinking about retiring really young, you probably should have more than 25 times your expected annual expenses saved up. 

Savanna: Okay, that's what I was just thinking. So you're saying if I had $2 million in the bank, I could just retire - that doesn't seem like that would work hahaha. I mean investing is so complicated with compounding and all that. I'm sure there are lots of calculators online where people can plug stuff in and all of that. So when we talk about investing and saving and paying off debt and all of these things - when there are so many different techniques and terms, what stood out about this concept of financial independence? Do you plan on retiring early? When you found out about this, what steps did you decide, like okay I'm gonna do these things to make this a reality for myself. 

Kat: So the two very condensed ways of achieving financial independence is trying to cut back on costs and save a lot, but then also try to invest throughout your career too. So you're trying to invest as much as possible for your future. In regards to whether I'll retire earlier or not, probably. I really don't want to work until I'm in my mid 60s or potentially even 70s. I'm not exactly sure when we will for sure retire, but again as I had previously mentioned, reaching financial independence or being close to it allows you the ability to really cut back on your work if you really want to. My husband and I don't have kiddos yet, but once we do, then that can help with a balance in our life at that point. Both my and my husband’s fathers passed away at relatively young ages. My dad was in his early 60s. and his dad was in his 50s. You hear all the time about how somebody reaches retirement age, and they’re so excited to retire and unfortunately something awful happens where a spouse passes away, or they get an illness, and they can’t do the things they planned for their retirement, whether that's traveling or other hobbies or activities. So that's why we're trying to pursue financial independence. 

Savanna: Yeah, those are great, great reasons. And that's so true. I mean, there is so much variation in the PA profession between our specialties, jobs, locations, life, and debt and all that. Is this a concept that you feel like most PAs would be able to achieve and pursue, or do you think you need to be in a certain place already before you consider making actions towards setting yourself up for financial independence?

Kat: Sure, that's a great question. I think that every PA and their family can reach financial independence, and there's a few reasons why. One is that PAs do make a pretty decent and good salary. There are many school teachers that reach financial independence on a salary that's way less than us as PAs. Again, it’s about those expenses, so you don't have to cut back everything and live super frugally. But you need to find the balance of finding those things that you value in life. You don't have to be married to a high income earner as well. You can be the primary breadwinner, but if you have a PA salary, then you can certainly reach financial independence. 

Savanna: Are there any resources that you use? I know there is Physician on FIRE, who talks about this who is a physician. There is also White Coat Investor; I feel like everybody knows about. What resources have you found to be the most helpful in just learning about finances?

Kat: Yeah! I absolutely love the White Coat Investor and Physician on FIRE; they're both excellent resources for those of us who practice in healthcare. As I mentioned before, Choose FI Podcast is great as well. And there's another PA on Instagram, Kristin Burton (@strivewithkristin). I recently interviewed her for my podcast as well. So she has tons of good resources too. There's so many good books too! The Simple Path to Wealth is an excellent book to start with, or Quit Like a Millionaire. It really depends upon what type of modality you want to learn from. There are podcasts, YouTube channels, books. I do have my podcast as well, PA the FI Way. I tried to really teach about these financial independence concepts, break it down in understandable pieces for peers and make it applicable to them as well. 

Savanna: Nice, and I love that it’s specific to PAs! As a PA, you can understand the education and everything that goes into it, the job, and all those factors as well. Let’s talk about the different stages. We have pre-PA students, PA school students, new grad PAs, and other PAs. What are some things that people can start doing at these stages to kind of set themselves up for financial success later on?

Kat: Sure, yeah so this is a really deep question that you can go into many different branches, but I'm going to do my best to be concise here and try to give some actionable tips along each step here. In high school, try to keep your college costs low when planning for college. You can do that by taking AP or dual enrollment courses. I went to community college for my first two years of college too, so you can plan to apply to community college, and then start applying to tons of scholarships in high school. Then in college, you can also consider living at home that can keep your costs low, or you can become a resident assistant as well. You can use used textbooks and apply to more scholarships, and then try to obtain healthcare experience. You don't have to spend tons of money on your education to be able to start getting some of those healthcare experience hours. And then when you do apply to PA school, make sure that you are applying only to those programs that you have met all of those prereqs. Because as you know the cost of CASPA is pretty high. And if you aren't meeting all those prereq requirements, then it's probably not worth even applying to because you have to pay for every single PA program that you apply to. And then, in addition to applying for more scholarships, consider joining the military because you can get your debt paid back as a provider. The PA profession was founded in the military, so it's very fitting. In PA school, live below your means. So you're going to have your student loans that you're going to get, but it's really important to start budgeting. You need to start tracking, probably three to six months of every single dollar that you're spending. Keep your housing costs low, you don't need to spend money to buy fancy medical equipment. Just the simple medical equipment can do. Try to get rotations near your friends or family. 

As a new grad, try to live like a PA student for two to five years. So don't let your fancy new income as a PA cause you to have lifestyle creep, meaning that the more money you make, the more money you're spending. Then really try to plan out how you're going to pay back those student loans, you can consider programs like Public Service Loan Forgiveness (PSLF). You can consider refinancing loans, certainly after the current COVID federal student loan pause is over though, and then try to start investing ASAP. Many jobs will have a match for their 401k or retirement plan. So try to start investing even if you are paying off your debt because time is your friend when it comes to compound interest. Also try to track your net worth. It’s hard to know where you're going to be going, which number is your financial independence number, and then how far along you are in reaching that number if you don't know what your current net worth is. There's a tool called Personal Capital (https://www.personalcapital.com) that I really like to use, and that allows you to put in different types of accounts to see where you are at that moment in time.

Savanna: Yeah I use that too. That’s a really helpful way to visualize everything and see where you are at. Those are great tips! As you were saying those, it’s funny and it sounds bad, but I was thinking about people who stand out at every level, either myself or someone I know. Like there was someone in my class who ate out every single meal, and someone else who bought a new car when they graduated. I clearly did not do everything perfectly either!

Kat: Exactly, exactly. I definitely did not do things right out of PA school either. I only learned about financial independence five years out of PA school, and I've been practicing for seven years now, so I definitely made all of those mistakes as well. You bring up a good point with food and transportation. Food, transportation and housing combined comprise 61% of American budgets. So if you can really focus on cutting back in those three areas, then you'll be able to save more money and invest for your future.

Savanna: What advice would you give to somebody who wants to learn about this but is overwhelmed? Do you have a good episode that would be a good place to start? 

Kat: That's a great question Savanna! With my podcast, in those first couple of episodes, I talked about what the PA profession is if people aren't familiar with it, and then I do also talk about financial independence, and the different steps that I mentioned along the way there too. I also did recently create a free resource called PA the FI Way Beginners workbook that you can find on my website, http://pathefiway.com/, so you can you can sign up to get that resource to start. Otherwise, you can shoot me an email at Kat@pathefiway.com, and I'd be happy to send you a copy of that too. 

Savanna: Perfect, yes, that's awesome, and you're on social media as well. I've definitely seen your posts popping up. I see yours and Kristin’s posts a lot because it comes up on my Instagram all the time, which is great. I need the reminders! Oh, and I’ll put all that information in the description, so everybody can find everything. I definitely appreciate all of your insights and information, and hopefully this will be encouraging to some people to at least take a look at their finances and kind of see what changes they can make. 

Kat: Yeah, definitely. And I wanted to thank you so much Savanna for having me on. I’ve been following you for several years now. I think we graduated PA school right around the same time, so I think it's awesome what you've built over time since you've graduated from PA school! So thanks for all you do for current and future PAs too! 

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How do Students Afford PA School? with Juno

Thanks to Juno for sponsoring this post!

One of the most common questions that comes up once you decide to pursue PA school is how do people pay for this? There are so many costs involved in attending a graduate program - tuition, fees, books, study resources, living expenses, etc. The majority of programs don’t allow students to work, and with the rigor of PA school, it would be extremely difficult to study and maintain a job. Most students end up needing to take out loans for all of these expenses, and then it gets confusing with all of the options available.

One of the most important things to look at when considering loans is the interest rate. The percentages you see may seem small, but when the money starts compounding on the first day of PA school classes, you will want it to be as low as possible! That’s where Juno comes in because they use group buying power to negotiate with lenders to get you the best interest rates available. It’s like buying in bulk to save money. Does it make more sense to buy one roll of toilet paper for $2 or 20 rolls for $10? You are basically getting a volume discount by combining your need for school funds with other students. I recently had the pleasure of speaking with Juno co-founder, Chris Abkarians, for my Youtube channel! I also encourage you to check out the Juno website yourself and see how up front they are with the process, but I’ll explain how it works. (And they have scholarships available that you should apply for right now!!) 

According to the 2019 PAEA report, the average cost of tuition at a private program was $95,058, with public programs coming in at an average of $52,585 for in-state students. Out of state students at public programs were just under the average of the private programs at $93,313. When you add in an average of $7,978 for fees plus living expenses that will vary based on location, that’s a huge chunk of change. Becoming a PA is definitely worth it, but those numbers can come with a shock value and the money has to come from somewhere. 

To see if Juno has a good option for you, the first step is joining the Juno student loan negotiation group for free and providing the typical information needed to obtain a loan. This allows Juno to put together a group of creditworthy students to present to lenders to compete for the best rate. The lenders will come back with options for flexible repayment terms and both fixed and variable rates or more limited terms. This is basically like sending your application out to multiple PA schools to see who is the best fit and has the best to offer you as a student. The story of how Juno began is really cool because the founders, Nikhil Agarwal and Chris Abkarians, actually did this process on a smaller scale while students at Harvard to save themselves and their classmates money just though negotiating directly with lenders. 

Juno looks at all of the offers and will evaluate what will be the best fit for the most members. Those factors include interest rate, fees, term and repayment options, customer service, eligibility criteria, and death and disability policy, as well as non-financial features. This holistic approach results in rates and terms that are better than anything available in the current market. 

After doing all of this work for you, Juno presents the negotiated deal for members to decide if the loan option is the best for them in comparison to other available loan offers. Juno will help you figure out the differences in what is being offered and also looks at the variation in the private and federal loan options. Both U.S. Citizens and U.S Permanent Residents can take advantage of this innovative approach to loan negotiations. 

If you decide the loan offer makes sense, you’ll have the opportunity to apply directly, but there’s no obligation to take the negotiated deals. You can pick a difference lender or decide not to get the loan at all. Juno will follow up and make sure everything went smoothly and all of your expectations are met through the lender that was chosen. 

I appreciate Juno’s transparency that you can see for yourself on the website. Many of the lenders offer a referral fee for using their services, but Juno will give that amount back to you when you use one of their deals. You’ll get at least 0.05% back in the form of a check when you take a negotiated loan through Juno. 

They also clearly state that you should consider federal student loans before any private loans, which some other private loan companies may not mention in the interest of getting business. 

Make sure to check out all of your options when looking into borrowing money. Compare the rates, ask questions, and look at the big picture to choose what’s best for your own situation, and including Juno in the process is a great idea. Click here to visit the Juno website and find out more! 

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How to Pay for PA School

I am really excited about this post because it is highly requested -- learning more about the financial part of paying for PA school. I brought on one of our interview coaches, Hanna, to share her experience with you because we have different experiences as far as the type of PA schools we went to, the cost associated and how we each paid for it. My hope is that this episode will help you plan for the future and understand the process of how people pay for these HUGE price tags that come with PA school. 

Before we do a deep dive, I want to point out that this is a very extensive topic, there's a lot that goes into this. We are not experts, we are not financial advisors. We're not going to share logistics of how to apply for these things or what exactly a certain program covers. For that you need to go to your registrar's office program websites. A lot of times your school will have this information, they'll tell you how much a program cost, what's involved, the fees, tuition, etc… and how to apply for aide and whatnot. Just know that everyone’s situation is different and this is a very personalized topic. 

Savanna (S): Hanna's going to start us off with talking about just what does it cost to go to PA school? What are the fees involved?

Hanna (H): In regards to cost a PA school and just as you just said, this is super expensive, there's a lot of different aspects to take into consideration. With the 223 programs, and varying private versus public programs in state versus out of the state that in general, right there is going to really bring down or hike up the cost of your program. I'm at the median cost going back to 2015/16 school year was about $89,000, for a private PA program. That, in comparison to where I went to school, it was a private program -- I was at $102,000 and that was six years ago. Clearly, that's kind of under marketing some of the programs out there. We also looked at the public median cost, and that was about 52,000. Stepping back, really look what schools are you applying to and doing your research on their website. Most schools have a wonderful cost breakdown of their tuition, the cost expected for fees and lab coats, didactic versus clinical years, and really getting a true idea of what the basis is going to be for your specific program. 

S: Just to jump in, you're $102k was for your total tuition for the whole time your in PA school? 

H: Correct. 

S: That's what these numbers are referring to , i.e., $89,000 as a median cost is your entire tuition fee for the two/three years, you're in school. Because schools are different lengths, you're going to have different amounts you owe each semester. In comparison to Hanna's private program, I went to a public in state program as an in-state resident. My final tuition was around $45,000 for my 27 months program. That's a pretty big difference. But hey, we're both PA. 

H: That's another great point that you mentioned in regards to length of program, my program was a 26 month program. Definitely something else to consider is how long are you going to be in the program, because that will definitely change the cost. 

S: Yeah, and I think also, just for people who are maybe in the process right now of deciding what school to go to, I think cost should be a factor -- I don't think it should be the only factor because you should choose somewhere where you're going to be happy. Also think about when you start school, especially going into application season -- if you're able to start a program in January compared to September, and then you're going to potentially graduate earlier, and especially if it's a shorter program, that can essentially give you eight extra months of income. It might make it more financial sense to go with the program that starts sooner if you're just looking at the cost of everything.

I thought this was interesting, the PAEA did a survey in 2015 of students starting PA school and one question was, “What do you expect your total debt from PA school to be, not including personal debt just from school?” 21.9% said they expected $100k to $125k, 20.8% said $75k to $100k, 14.5% said $50k to $75k. That's a pretty good spread and a lot of money. I know it sounds like a lot of money and something to mention, coming out of school right now, the average salary for a new grad PA is around $75k to $80k. There are a lot of factors that go into that, such as where you live, cost of living and specialty and all that. This is just an average. 

Let's talk in-state versus out-of-state program costs. I decided to go in-state and the cost was part of it. That price tag looked a lot better than another program I was considering that was four times as expensive when it came to tuition and cost of living and all that. 

H: I knew that I wanted to go out of state and there was a big push for me to stay in. I grew up in Georgia from Atlanta. I've always wanted to go out of state and I made that decision applying to graduate school programs, specifically out of state. One of my biggest regrets was not taking into account the finance, the process, and not really having a full grasp of how the various costs of the PA schools. And I didn't realize that much further into my application process. Ultimately I didn't end up taking that into consideration with my school choice. And I'm paying that off now. 

S: I think a lot of people are at this point are so eager to get in that they don’t look at that and it’s ok! Like I mentioned earlier, I don’t think it should be the biggest deciding factor, but it should play a role. One question we got on The Pre-PA Club Facebook group is, “Can you switch from out-of-state to  in-state, so if you apply to a school that has a cheaper option for in-state residents, can you technically become a resident?” You know, for Georgia, I think there were a few people who were able to do this, I think you have to live in Georgia for over a year and have a good amount of documentation in your name, you have a license and bills, to show that you're truly a Georgia resident. Now, if you're only gonna be there another year, is it worth it? I mean, you're probably saving $10-15,000 but then you're gonna have to move and do all that again, most likely. Each state's going to have their own rules. Hanna, your school didn't have an in state option?

H: Correct. A lot of the states are very happy to have lived in that state for one year client, Most states and again, a very, that you have to live there for one year prior to starting your program. With that being said, most of us are finding out that we're getting into a program until under that one year mark, and it's very specific in regards to one year, so not, a school year but rather one full year. In many schools, once you've come in as an out of state resident, you cannot switch to an end state further along in the years. Schools have become very strict on following this, looking at where you're paying your taxes with, where you're registered to vote. It's not so much “Oh, my grandmother, or my sister who lived in New York”, which is where I went to school. It is definitely something that you really have to take the time to look at what your state requirements are and to talking to the school because some of them are willing to help make it work, especially it's, you know, come close to qualify. 

S: Yeah, and I think that, again, is something to look at. Just from an application standpoint, if you're applying to schools, because that process is expensive, too. That's a whole other post. If you are applying to schools, I strongly discourage applying to in-state programs, if you are not a resident of that state or if you don't have an extremely competitive application, and you know, some of these schools, they set 90% in state residents. At my school, we had 44 people, and it was 90% in state residents, we had, I think four or five people who are out of state. That wasn't something that was negotiable, they had a certain number of spots, because they got public funding. You could apply there if you're out-of-state, but your chances compared to an in state resident were so, so much less. You don't really want to waste your time and money applying to a bunch of programs that you are really only competing for a few spots. 

H: One thing that I found really interesting that I didn't know existed when I applied to PA school. and now that I'm living on the West Coast I have been interested in because I've been helping do mock interviews, and watching these acceptances start to roll in, which is very exciting, is that a lot of states participate in regional programs. Although you may be from California, I know that there's a Western Regional graduate program that allows Western applicants to apply to other schools within the region and your aren’t stuck to just your home state and still get in-state tuition. There's a regional one for the southern region,  Western, New England that I was able to find. These do apply for graduate school. I would definitely recommend looking into these and seeing if you qualify for those qualifications.

S: My school kind of did that because we're right on the border of Georgia and South Carolina, I went to Augusta University -- if you were from a few certain counties in South Carolina, you were considered an in-state resident for tuition purposes which was awesome for them. 

This was something that I thought was worth talking about, switching to in-state, if that's an option for you, you're going to try to become an in-resident, if you are still being filed on your parents taxes, you may not be able to switch. My parents claimed me on their taxes until I got married and I was 23. They were helping out with my school. As a parent helping out with my school, they got a little bit of tax benefit from that. They wanted me on their taxes to be able to write that off and get that reimbursement or whatever they got, I don't really understand taxes. They would not have probably let me switch or wanting me to unless I wanted to start buying my own taxes and paying for the rest of my school, which I did not. 

H: Definitely communication is key with that one with your parents. I know my parents and I went back and forth on that for a little bit because they can save I think it's up to like $2,500 per tax season so that can definitely add up pretty quickly. You also don't want to get caught doing tax fraud by both trying to file for that. Definitely having good communication is key. 

S: Definitely. Okay, so how do people pay for PA school? 

H: The number one thing you need to do is you need to apply for FAFSA. For FAFSA, that's your federal aid for for students across the board. It's that kind of the best way to start and it's broken down into direct subsidized loans and unsubsidized They have a great website called FAFSA forecaster that predicts your expected contribution of your fees to graduate school. In graduate school, you don't actually qualify for direct subsidized loans, that's no longer available, they cut it out in 2012. Basically, in a lot of applicants, probably do have loans from undergraduate but during undergrad when you got these loans, all that meant was the government was helping pay for the interest on these loans, so that was not accruing. This is a really big deal and would be really nice to have for graduate school but now for graduate school, you can only apply for direct unsubsidized loans, also known as Stafford loans. What that means is that you can take up to $20,000- $20,500 for a year, I believe. As soon as you take out that money, you start to accrue interest on that money and you're responsible for paying that once you get out of that program. You get a six month leeway with that, but the interest is accruing the moment that you receive that loan. 

With that, let's talk a little bit in terms of what that money does. When you go through the FAFSA application, which I don’t know about you, Savanna, but I felt like it, it's very straightforward. Name, DOB, --  very straightforward application. Once you get approved, which is relatively easy, that money goes directly to your program. You don't ever touch the money that goes directly into your program. It gets immediately applied to tuition and fees. If there's money left over from that, it falls into your room and board if you are rooming with the school, then after that they reach out to you for permission to put it towards other charges that may come with the program. If there's still money left over from that point, then you get a check, or somehow receive that money back and use that towards your education costs. Savanna, I’ll let you take it over for a little talk about your experience with FAFSA and a scholarship. 

S: I applied for FAFSA, I didn't have any debt from undergrad, which was great. Georgia has something called the HOPE Scholarship where if you qualified, and it’s changed a little bit since I got it, but they essentially cover all of your tuition and fees. The only thing that I had to pay for, or my parents helped me pay for, in undergrad was living expenses, which was amazing. I had to obviously keep my grades up and all kinds of other qualifications but going into grad school, I did have to take out loans.  I took out these Stafford loans, I filled out FAFSA. I was actually the last or at the tail end of when you got subsidized loans. I had one semester where I got a little portion that was subsidized, which I'm thankful for but the rest of my loans were unsubsidized. I took out the $20,500 for the year. Now my tuition for the year was a little bit and fees was a little bit more than this. I ended up taking out total $45,000 in I guess I took $40,100 but my tuition was $45,000. My parents did help out with you few thousand here and there, which I appreciate and I was living with them which helped save on expenses. These loans did end up getting interest right away. Now, you put the current rate here, which is 6.6% -- that is a very high interest rate. Just FYI, I think mine was around that, too. My supervisor physician talks about her loans from medical school and her percentage was like 1% -- it's so so low, and it has changed so much since then. 

I'll talk a little bit about my experience FAFSA, because when I applied, I was awarded a scholarship randomly, and I didn't know that I was applying for scholarships, but some of them do pull your information from FAFSA. About a semester into PA school, I got a check in the mail for $1,500 dollars and a little letter saying I was part of this Lettie Pate Whitehead Scholarship, and a few other people in my class also got it. I received those checks, I think three times during school, which was crazy -- it was just out of nowhere. It was one of those things where you get the check in the mail and you kind of question it, is this real? Is this a scam? What is it? When I looked it up, it was a real thing. It's a special scholarship for women in the Southeast who are pursuing medical degrees -- that was awesome. That helped out a ton with my fees and extra expenses here in there -- you've got to pay for equipment, all kinds of things. Luckily for me, I didn't have to take out any additional loans. Just to clear things up, the way that most people pay for PA School is loans and that's okay. I mean, I would say there are a few extremely lucky people who maybe their parents can help them out completely, or they were able to save a ton of money, but for the most part, everyone's going to have loans. Would you agree, Hanna? 

H: Absolutely. I think one, you know, the bright light at the end of the tunnel is that we're going into a career where we should be making money to pay back those loans. That's incredibly rewarding and exciting, because a lot of people do not have, necessarily that guarantee when they get out of graduate school. I do think that it's you know, and most people have already made this decision that it is an investment that is worth making. You definitely have to make sure that you're ready for that because it is a lot of money. If you're not going to follow through on it, you don't even want that first $20,000 of debt sitting on you. 

S: I mentioned that at the beginning, before we started that, I was just getting my loan money went straight to my tuition and fees. I never saw a penny of that. I did not check my interest before or throughout school -- I just didn't want to know, I didn't want to look. I knew it was accruing interest. By the time I graduated that $40,000ish had turned into $75,000 that I owed and that was a little shocking to me. That is what it is what it is.

H:  It definitely stings and is motivation to get that job. 

S: Oh, yeah, I went to work right away. I was like no vacations here, put me to work! 

One question was, how do you know what to do? How do you know how to get these loans? How do you know how to pay for this stuff? Is this something that schools help with? 

H: I would head to the financial aid office, they're definitely going to point you in the direction of FASFA first. They may also be aware of certain scholarships, it really depends on how involved the financial aid section of your schools involved in the graduate program, I felt where I went to school, it was not as involved as it was in the undergrad program, because they had a massive undergrad program. You're really able to find some better systems online, and they can definitely at least point you in the right direction. I think it's a great place to start. How about you? How did you go with that? 

S: I felt like our school was very helpful. The first thing they tell you to do is fill out FAFSA. They kind of tell you that and then give you a little bit direction as far as loans after that. What would what would be the next step after you got your Stafford loans, they paid for your tuition fees, but now how are you going to pay for living expenses? 

H: Absolutely. So definitely, with the cost of my program, the $20,500 did not cover my tuition and fees so that's when I started to look at grad PLUS loans. Those loans are at a higher interest rate, they are at a higher fee, I believe the interest rate is about 7.12% don't quote me on that, but it is still high, but it's not 12-13%, which you may see some private loans at, and this is going to change year to year. With the with the grad PLUS loans, they will cover for the rest of your fees for your program, minus of course, they take a look at what other loans you've already received and subtract that from what they will finally get to you. That can be used towards living expenses. For example, I was living in New York, paying for a studio apartment in Manhattan is not cheap. My sister shared the studio apartment for a little while because of expenses, and really just did whatever we could to get the costs down. But you know, those loans went towards that and for food and those coffees that I probably should have cut out a little bit more, but they just surviving PA school. 

S: When people ask, how much should they took out loans. In my mind, you want to take out the most minimal amount possible. Everyone's going to be a little bit different in their kind of thoughts on this because I definitely had people in my class who ate out every single meal, and I knew that they were living on loans. Then after school, usually they were the first ones to go buy a brand new car. You have to make your own I think financial decisions but you want to make sure you have enough money to live on to.

H: I think you just kind of have to learn semester to semester, I know that some of my really close friends in PA school, we talked about this a lot. It was like how much are you taking out? Calculating our rent and our expenses? I think it should be an open conversation because it you know, it is the same cost to attend this program across the board. Are you kind of keeping in mind but like, are you paying $2,000 more per rent than your friend? Do you need a roommate? Should you save those expenses, but also just making sure, like the cost of your stethoscope and your books and other fees are kind of keeping in line and holding each other accountable for some sort of budget to figure out what you should be taking out and trying to live off.

S: I agree. Plus, you can always take out money and then give it back. You don't have to use it all or you don't have to let it sit there. If it's in your savings account that makes what like 0.05% interest rates, like those that nickel you make over six months is not going to counteract the interest that you paid on it. This is not money that you want to take out and try to invest. It's not fair investing, your return is not going to be higher than your interest rates. Again, I'm not a financial advisor, but I've read enough White Coat Investor to know that that is not a good idea. 

I don't know what your thoughts are or if you have any experience, but do you know if people are paying back loans for undergrad, if they go into deferment?  I feel like this is going to depend on where that came from? 

H: Exactly. So This is definitely dependent on where the loan came from.  We're talking about the terms of the subsidized loans earlier meaning government's paying your interest. If you are enrolled in school, at least half time, those direct loans will be placed into different banks. You don't have to make any payments on those until six months, just kind of like your other your first a new loans give you this grace period. If they're private loans, if you're not sure what type of loan they are, you kind of need to do the research. These things are changing constantly. In regards to something we didn't mention earlier, but there was a Federal Perkins loan for a while and that no longer exists. So laws come in and out based on the year. You really have to do your due diligence, following up on what's going to happen with your student loans. 

S: I love Google who doesn't. I mean, just kind of searching for things, you can find stuff on the PA forums, and there's a lot of information out there. But again, your school is going to be the best person to talk to, and talk to the class above you and see what advice they have as far as what they've done and maybe mistakes they made just so you can try to avoid that. 

H: We want to close off This episode in regards to talking about refinancing. After you've made it through PA school, and you've got multiple different types of loans, possibly public and private, really looking over those loans and more specifically, the interest that you've accrued on them and the interest rate at which they're accruing. So for myself, I think I had six or seven different loans come after the completion of PA school. The loans really varied year by year. I might have had one that was kind of had a 4%, 6%, 7%, I had a 12% and a 15%. Then I had another one that was relatively low, 4-5%. The first thing that I did was sat down and talked with my parents about them and again. This is an important aspect to remind you guys that we're not financial advisors, you really should consider speaking to someone about this, but knowing that you can refinance these loans and basically group them together as one specific, total sum of money and reduce the overall interest rate. That way, you're paying maybe 6% on all of your loans rather than possibly the high 12-15% loan. That's really going to change year to year. If you guys want to really follow this market, you've seen that this year, interest rates have gone up quite a bit, last year they were much lower. Watching to see what they do over the course of your PA school career. SOFI is one of the refinancing tools and there's Earnest and Common Bond, there are so many out there, but a lot of these specific businesses, they look at graduate students who are coming out of programs that they know are going to make a good salary.

The reason why that they aim their businesses towards us, because they know if you're making a good salary, you should be able to pay off your debt, that you shouldn't become bankrupt and go out on your loans. With that, they're really willing to work with you and set a low interest rate in comparison to what you've been sitting on for the past, let's say 26-27 months. So it's definitely something to look at multiple at these different options and companies to see what the lowest possible interest rate you can get. So that you can ultimately start paying off these loans and paying off as little interest as possible. 

S: I only have federal loans so I was not able to refinance, I have looked into it. With some of the kind of repayment or federal programs, if you do end up refinancing your loans, they kind of lose eligibility for some of that. So you really have to look at it and think about it, talk to someone who knows what they're talking about, like a financial advisor before you decide to do that. I have heard really good things about the SOFI. 

Anyway, another thing that people sometimes talk about is, and this is just a way to pay back your loans afterwards is, will jobs pay for your loans? Is there a way for your employer or your supervising position to pay back your loans or help you out with those? It's not out of the question, I've heard of that happening. In my mind, you never know until you ask and so when you're in your contract negotiations, why not throw it out there you know, see if there's options for some loan repayment. Usually the way I've heard it work use you know, through there for a year you get a certain amount or two years or three years that go straight towards your loans, or it's given as a bonus for your loans, essentially. That's something to think about. It doesn't happen that often, I don't think so. Didn't happen for me, you never know. 

Thank you so much, Hanna for taking the time to share your experience!

Make sure to check out my Youtube channel to learn about more ways to pay for PA school! Here are some videos you may be interested in: Student Loan Options for PA School, How to Afford to Pay for PA School, Learn How to pay for PA School with Stride Funding, and How to pay for PA School.

To listen to this interview as a podcast, click here!

Let us know other topics you would like for The PA Platform to cover in the comments below.

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How I Paid Off my PA School Debt

So have you heard that PA school is expensive?  Well, that might be an understatement.  Any graduate program is going to be a little pricey, but medical programs tend to be on the higher end of things.  If you look at estimated costs for PA school, you'll see a broad range from 5-digits all the way to hundreds of thousands of dollars.  That's a lot of zeros.  And you have to look at tuition + fees + books and other resources + tools + traveling for clinicals + housing + food + everything else!

Thankfully, I went to a public program so that initially cut my costs.  My second choice school would have cost 4x as much as my program cost.  Unfortunately, that's the norm.  I had a few other advantages that helped me to cut back on the amount of loans I had.  Which brings me to Tip #1 - Take the minimum amount of loans possible!  I was able to live with my parents for the first year, and although they couldn't cover all of my expenses, they covered my fees.  I only had to take out loans to cover my tuition.  I also went to a public program, and that decreased costs significantly.  Tip #2 - Don't take out extra money to put into savings.   The amount of return you get in savings is so much less than the amount you're being charged in interest, so it's just not a smart financial move.  

I took out federal loans though Sallie Mae, which is now Navient.  I made an interesting, somewhat subconscious, decision to not ever look at how much I owed until the end of PA school when they make you do financial literacy training.  I guess I figured that it wouldn't make any difference since I wasn't able to start paying them off yet anyways.  And although I was not able to do this, here's Tip #3 - If there's any way that you can make payments during PA school, do it.  (Even if it's a small amount.)  If you get any extra income, have a spouse who works, or have savings you're sitting on, think about putting some of it towards your loans.  Those small payments make a big difference in the long run, especially with high interest rates.  

So anyways, when I pulled up my loan summary, I owed around $75,000, and that was shocking to me.  Now I know that PA school costs a lot more for a lot of people, but you can't deny that 75K is a big chunk of money.  I mean, that's the average starting salary for a new grad PA.  About 55K was principal (meaning that I had actually borrowed that much), and the other 20K was interest (the fee for the money I borrowed).  My interest rates were varied, but averaged at about 6%.  

After you graduate, there's a grace period where you are not required to make payments on your loans.  Tip #4 - If possible, start making payments during your grace period.  While you don't have to make payments, your interest is compounding and growing.  From day 1 of getting a paycheck, it helps if you start making payments right away.  You won't miss the money if you already have it dedicated to your loans.  I committed to this at first, but then I got a little lazy.  My original goal was to put at least 1/2 of my salary each month towards my loans.  But then I got the great idea that I would just put whatever was left over at the end of the month towards them.  Just kidding.  Not a great idea.  That only lasted about 2 months before I got myself back in check.  After working so hard for 2 years in school with no compensation, it can be easy to go a little crazy.  I would love to tell you to make a budget and stick with it, but I'm personally terrible at budgets, so I can't give you much advice in that area.  

So I went back to committing at least half of my salary to go straight towards my debt.  Tip #5 - Decide how much you want to put towards loans each month, and do it.  As you see the amount you owe decrease, it's so reassuring.  There are differing views on what loans to pay off first.  Dave Ramsey has the "Snowball" plan, meaning you pay the one you owe the least on, without regard to the interest percentage, and go from there to gain momentum.  I paid off the one with the highest interest rate first, and then worked my way down.  If you do automatic payments, you may get a decrease in the interest amount.  

After you've put your committed amount towards loans, if you have any extra money coming in, consider putting it towards your loans.  Tip #6 - Try to put extra funds towards your loans.   Every little bit makes a big difference.  It may not seem like it at the time, but I don't think I would have paid off my loans as quickly as I did if I hadn't done that.  And I can think of specific purchases that I made that delayed my final payment, and they probably could have waited.  

So back to my loans.  After I found out how much I owed, I committed to paying half of my salary each month to my loans, and any bonuses I got.  There were a few hiccups along the way, but I got better at it with time.  I tried to put any extra funds to my loans.  I started working in August 2014, and this past January 2016 I made my last loan payment!  It felt awesome.  Took my entire bonus/commission, and drained our bank account, but it was worth it.  I feel like a weight has been lifted off my shoulders, and I have a lot more freedom at this point.  Instead of going to the beach a few hours away, I can afford the trip to the DR without feeling guilty for not paying towards my loans.  Tip #7 - Make frugal choices while paying your loans, not extravagant ones.  

Everyone is different, and I'm sure not everyone will agree with how I did things.  But that's ok, and I'm extremely happy with where I'm at.  Debt-free, and able to start saving more and making good financial decisions.  Tip #8 - Do what works for you.  I'm a generally frugal person anyways, but I can splurge on something like a vacation or good meal.  Making big purchases, like furniture, are a lot more fun now too.  

At the end of the day, whether you're still in undergrad or worried about affording PA school, your loans will be paid off at some point.  It may not be as soon as you would like, and you'll probably make some mistakes, but it will happen!  If you have any other tips for others about paying off loans, please comment!  Or if you've paid off you're loans, I would love to share your story and help others to have confidence that it is possible!  

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